Life without Sequence of Returns Risk (SORR)

[corn18]

I have a gigantic spreadsheet that I use for planning my retirement. I usually use 2% real return on my 60/40 portfolio. Then I use Firecalc or the Flexible Retirement Planner to run my Monte Carlo sims. I decided to look up what the historical return on a 60/40 portfolio was and found it was 5.6% real. So I plugged that into my spreadsheet and let out a titter. Wouldn't life be grand if we could retire on average returns vs. sequence of returns?

This scenario has a 96% Ps in The Flexible Retirement Planner. Looks a little different on my spreadsheet chart with no SORR.

 

[NW-Bound]

Life without Sequence of Returns Risk (SORR) ...

... would be boring.

 

[brett]

Sequence of Returns has been very, very good to us.

Just prior to early retirement and for several years after early retirement.

Missed some potholes, got the advantage of the wind very much behind our backs for a few years while we were all in with equities.

Did not need it, but it was certainly better than a poke in the eye with a sharp stick.

 

[daylatedollarshort]

We don't have much in stocks and have very little sequence of return risk. We planned our retirement on not needing stocks. I don't want to have to worry about the stock market and I'm okay with not making as much money. It is more important for me to not lose what took a lifetime to save.

 

[Offgrid Organic Farmer]

I think that a 'Sequence of Returns risk' only happens If you are taking withdrawals from your portfolio.

If you refuse to draw down your portfolio, then such a risk vanishes.

 

[corn18]

I think that a 'Sequence of Returns risk' only happens If you are taking withdrawals from your portfolio.

If you refuse to draw down your portfolio, then such a risk vanishes.

To do that, I'd have to work another 15 years. Not gonna happen.

 

[NW-Bound]

I think that a 'Sequence of Returns risk' only happens If you are taking withdrawals from your portfolio.

If you refuse to draw down your portfolio, then such a risk vanishes.

If you don't need to draw from your portfolio, then there's no need to have a portfolio.

 

[Scratchy]

If you don't need to draw from your portfolio, then there's no need to have a portfolio.

Priceless!!

 

[RobbieB]

Yeah Baby!

I need mine though. I hit it hard every year.

 

[DrRoy]

It might be nice to hit the lottery too, but that's not gonna happen either. (Something about you have to buy a ticket.)

 

[Dash man]

It might be nice to hit the lottery too, but that's not gonna happen either. (Something about you have to buy a ticket.)

You have to buy a ticket? Then how do I keep winning lotteries in Nigeria?

 

[Offgrid Organic Farmer]

If you don't need to draw from your portfolio, then there's no need to have a portfolio.

You need somewhere to park your money.

My investment pays me cash every month, but I am not drawing down the investment. The original investment stays the same, as it pays me each month.

 

[corn18]

You need somewhere to park your money.

My investment pays me cash every month, but I am not drawing down the investment. The original investment stays the same, as it pays me each month.

That is a beautiful thing. We won't need our portfolio at all once SS kicks in, which is nice.

 

[NW-Bound]

You need somewhere to park your money.

My investment pays me cash every month, but I am not drawing down the investment. The original investment stays the same, as it pays me each month.

Just teasing.

There are quite a few posters here who draw very little if anything from their stash. They can live comfortably on pensions+SS, and the stash is just for discretionary spending.

I myself was drawing 3 to 4% at the start of ER more than 8 years ago. With the growth of the portfolio plus my wife's SS, I found myself drawing only 0.6% for the last 12 months. Even when travel resumes, just 1% WR will be enough. And when I decide to draw SS, I may not need any withdrawal at all.

All of that is due to good luck. Of course, the question is what my stash is for. I dunno. Just for the joy of having it, I guess.

 

[Offgrid Organic Farmer]

That is a beautiful thing. We won't need our portfolio at all once SS kicks in, which is nice.

I am a few years shy of SS as well.

 

[RockyMNHiker]

That is a beautiful thing. We won't need our portfolio at all once SS kicks in, which is nice.

Ummm, not sure what contest you think you entered, but dying with the most money in the bank is nothing to be proud of.

 

[Toocold]

COLA pension that pays more than your annual expenses = no SORR. Easy.

 

[Offgrid Organic Farmer]

Ummm, not sure what contest you think you entered, but dying with the most money in the bank is nothing to be proud of.

There are many good charities that you can give your estate to.

 

[corn18]

There are many good charities that you can give your estate to.

I was camping this weekend with my friend who is an estate tax attorney. I was asking about starting a scholarship fund. We decided it would work best to open a DAF early next year and put in highly appreciated mutual funds. Then I can take my charitable deduction next year when I'm still in the 35% tax bracket. I like that idea.

 

[Offgrid Organic Farmer]

I was camping this weekend with my friend who is an estate tax attorney. I was asking about starting a scholarship fund. We decided it would work best to open a DAF early next year and put in highly appreciated mutual funds. Then I can take my charitable deduction next year when I'm still in the 35% tax bracket. I like that idea.

If I have a lot of income that was not tax-sheltered I would likely do that too.

I have been fortunate in keeping most of my income tax-sheltered since 1983.